Nelson: 'Ag community must lead the way’

The public portion of the meeting was highlighted by guest speaker Rex Nelson, senior editor of the Arkansas Democrat-Gazette, who spoke on the “Changing State of Rural America.”

Shea Higgerson / Stuttgart Daily Leader

More than 300 members and guests attended the 74th annual membership meeting of Producers Rice Mill, Inc. held at noon Thursday at the Grand Prairie Center in Stuttgart.

The public portion of the meeting was highlighted by guest speaker Rex Nelson, senior editor of the Arkansas Democrat-Gazette, who spoke on the “Changing State of Rural America.”

Nelson reflected on growing up in the Grand Prairie by reading a forward he wrote for a book.

He said one of the problems the Grand Prairie experiences is the loss of population. He advised that Monroe County lost about 25 percent of its population in just 10 years. He said he believes the state will have lost more of its population by the time of the 2020 census.

Nelson also spoke about how farming has changed over the years and how farmers have become more and more efficient as new technology and farming methods came around, becoming “more urbanized.”

“If communities are going to continue to exist in the face of these population trends and communities are going to continue to thrive in the face of these population trends, that frankly I don’t see ending anytime soon, then it is the American farmer…(that) is going to have to lead the way,” Nelson said.

Nelson explained that people are going to go where the quality of life is good and communities must change their economic development mindset to accommodate that.

Business Meeting

Following the luncheon and speech, the business meeting for members only was held. Keith Glover, president and CEO of Producers, began his report on the 2016-2017 marketing year.

Glover said overall receipts from members during 2016-2017 were 63,803,960 bushels, which was the second largest crop in Producers’ 74 year history.

Producers’ eligible long grain seasonal pool averaged $4.41 per bushel for a 55/70 milling yield, which once again beat the national long grain average price according to the United States Department of Agriculture (USDA). This is the 28th consecutive year Producers long grain seasonal pool has beat the USDA national average. Producers’ overall eligible medium grain pool averaged $4.459 per bushel.

During 2016/2017, Producers’ mills processed a total of 62.9 million bushels, up 10 percent from the previous year. Also during the year the Greenville milling facility broke its previous milling record by nearly 2 million bushels.

Overall sales during the year were $420.3 million, up $5.3 million from last year. Financially, Producers’ working capital at year end increased $6.4 million to a record $65.0 million. Net taxable income on an income tax basis was $877,718. Members’ equity of $6,599,101 was redeemed during the year. Even with the historically large equity redemptions, at year end, overall members’ equity stood at a record $120.5 million.

Glover then turned his attention to the new 2017/18 marketing year.

After a fast start to the 2017 planting season, dreams of a good year for many northern Arkansas and Missouri farmers were shattered when a series of thunderstorms produced over 8 inches of rain resulting in 100 year flooding in many of the rivers and streams of northeast Arkansas. The weather concerns for the 2017 crop continued into harvest as the mid-South had to dodge the remnants of two historic hurricanes. Producers’ biggest concern was Hurricane Harvey which came up from Texas. At the time of its entrance into the mid-south only 18 percent of the Arkansas rice crop had been harvested, according to the USDA.

In general, 2017 rice field yields in the mid-South were definitely better than a year ago and in some cases farmers have reported cutting their best rice crop ever. According to USDA, Arkansas’ average field yields are up nine bushels per acre at 163 dry bushels per acre while Mississippi average field yields are estimated at 160 dry bushels per acre which was the same as 2016. Based on green rice receipts data, Producers employees believe USDA will likely increase 2017 average field yield estimates for the mid-South in future reports. 2017 milling yields are averaging 3 pounds per cwt. higher than last year.

Despite the higher field yields around the mid-South, a 30 percent decrease in mid-South rice acreage was a major factor in what was generally a relatively smooth 2017 harvest. The longest lines occurred at all of our drying facilities during the days leading up to the two hurricanes passing through the mid-South. In order to help members cut as much rice as possible before the remnants of hurricanes tracked through the mid-South, most of Producers’ drying facilities extended their dumping hours.

Regarding the rice market Glover said in his opinion the most important market fundamental affecting a new marketing year is the size of the crop. Currently, USDA estimates the 2017 U.S. long grain crop at 126.3 million cwts, which is down a whopping 40.2 million cwts or 24 percent from the previous year. This makes the 2017 U.S. long grain crop the second smallest in the last 10 years. Due to the smaller crop, USDA is currently projecting 2017-2018 ending long grain stocks will be the tightest in 15 years.

Once the size of the crop is determined, the next critical market fundamental is export demand. Export demand for U.S. long grain rice started the 2017-2018 marketing year considerably higher than the five-year average. However, since then, a series of lackluster weekly sales has caused the pace of 2017-2018 export sales to now lag behind the 5 year average. In analyzing the key U.S. export markets that will likely determine the fate of U.S. long grain prices this year, the Western Hemisphere continues to be the largest and most steady export demand for U.S. long grain rice. During 2016-2017, an amazing 91 percent of U.S. long grain exports stayed in the Western Hemisphere.

The largest and most important market for U.S. rice is Mexico, which buys about 700,000 metric tons of U.S. rice per year. The U.S. is currently renegotiating the North American Free Trade Agreement known as NAFTA. Glover said the U.S. has been assured by the administration that it does not intend to do any harm to the many U.S. agricultural products like rice that are regularly exported into the Mexico. Nonetheless, we will be following the NAFTA re-negotiations talks very closely.

In the global rice market, world rice stocks according to USDA continue to rise. However, that is because China’s rice stocks continue to grow according to USDA and now comprise 65 percent of the overall world rice stocks. According to Glover, Producers is very skeptical of the Chinese rice numbers. He believes a more accurate depiction of the state of world rice stocks is to remove the Chinese numbers. Once the Chinese stocks are adjusted out, the rest of the world rice stocks are declining. If USDA projections for 2017-2018 become true, world rice stocks net of China at the end of this marketing year will be very similar to 2007-2008, which was the last time world rice prices traded at significantly higher levels.

Two countries we have talked a lot about in recent years as potential U.S. rice markets are Cuba and China. Regarding Cuba, all of the progress in recent years on re-normalizing relations with Cuba have been put on hold for the time being as President Trump reversed many of the renewal efforts initiated by President Obama. Glover said he doesn’t anticipate Cuba buying U.S. rice during 2017-2018 nor over the next few years.

In the case of China, after more than 10 years, the Chinese finally signed a rice phyto-sanitary protocol with the U.S. Glover credits U.S. Agriculture Secretary Sonny Purdue for the protocol finally being signed by the Chinese. The protocol allows for the Chinese to inspect U.S. rice mills and export facilities one more time. The U.S. rice industry is now waiting on the Chinese to complete the inspection task so U.S. rice exports to china can begin.

Glover thinks time is running out on whether the new Chinese agreement will have any impact on the U.S. rice market during 2017-2018 since any shipments of U.S. rice will likely begin small in the form of containers. Nevertheless, since China has a daily consumption rate that could consume the entire U.S. rice crop in only 14 days, just a small market share could someday have a huge impact on U.S. rice prices. Long term, the U.S. remains optimistic that both China and Cuba will eventually be large destinations for U.S. rice.

In closing, Glover said he wanted to thank all the members for their support and patronage of Producers Rice Mill, Inc. He was also thankful for the hard work of all of the Producers’ employees during the past year.

In the business session following the annual meeting, Jerry Brown. Marvin Cochran, Heath Harris, James E. “Bud” Bingham, and Chris Dickson were elected to serve three year terms on the board of directors.

In the board meeting following the membership meeting, Jerry Hoskyn was re-elected to the position as chairman of the board of directors.

Jay Coker was also re-elected as the vice president and vice chairman of the board. Other officers reelected were Keith Glover, president and general manager; and Kent Lockwood, secretary-treasurer.

— Business meeting information provided by Producers Rice Mill, Inc.

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